6.3% income tax cut, tuition freeze make Senate budget plan

Senate budget also includes money for Central State University and pay raises for local elected officials.

The Senate Finance Committee voted 9-4 along party lines in favor of the bill. The Senate is scheduled to give it a floor vote Thursday.

Senators agreed to increase pay for elected officials by 5 percent each year for two years but noted that state lawmakers pay will not be included in the raises.

Under the latest version of the budget bill, Ohio’s top tax rate would be pushed down to 4.99 percent and cigarette taxes would be bumped up by 40 cents per pack. Lawmakers failed to come to an agreement on changes to the taxes paid by oil and gas producers but promised to study the matter and report back by Oct. 1.

The Senate budget calls for spending $129.8 billion over two years, including $73.1 billion from the general fund. Overall, the Senate version calls for a $1.7 billion net tax cut for Ohioans.

Republicans on the Senate Finance Committee added two last-minute changes that further hamper abortion providers in Ohio. The first requires abortion centers to have transfer agreements with local hospitals no more than 30 miles away – current law doesn’t prescribe a distance. The second change requires the Ohio Department of Health to approve the transfer agreements within 60 days or they are automatically considered denied.

State Sen. Bill Beagle, R-Tipp City, offered an amendment that will deliver $700,000 in federal funds and $300,000 in state funds each year to Central State University. The university gained land-grant status last year, making it eligible for the additional money.

The House and Senate versions of the bill earmark $2.5 million in state money to help move the Montgomery County Fairgrounds and earmark $25 million for the Applied Research Corp., an arm of the Wright State Research Institute, to work on technology commercialization, research and workforce development that will shore up the value of Ohio’s federal military installations. The goal is to help inoculate Wright-Patterson Air Force Base and other federal installations in Ohio if a Base Realignment and Closure occurs soon.

The House and Senate versions also contain a provision to withhold state money from cities, such as Dayton, that continue to employ red light cameras even after state law changed to severely curb use of the cameras.

Senators also approved eliminating a 24 percent tax on electric generation equipment and recalculating the tax rate paid on electric transmission and distribution equipment to make up for the tax cut on power plants, according to the Legislative Service Commission, a non-partisan entity that drafts and analyzes bills and amendments. The amendment also allows the electric companies to pass along the increased transmission and distribution taxes to customers, according to the LSC synopsis.

State Sen. Bill Seitz, R-Cincinnati, however, said it’ll be a wash for customers. “It’s revenue neutral and there’s no double charges,” he said.

After the Senate floor vote, there will be three versions of the budget bill – Kasich’s, the House and the Senate – the legislation will move to a conference committee to iron out a compromise by June 30.

The major sticking points center on tax and education policy.

Gov. John Kasich wanted a 6.5 percent severance tax on oil and a 4.5 percent tax per 1,000 cubic feet of liquid natural gas, a 23 percent across-the-board income tax cut, a top income tax rate of 4.1 percent and higher business and sales taxes. He also wanted to change the K-12 funding formula to funnel more state aid to low-wealth school districts that are less able to generate local funds.

And Kasich wanted to cap tuition increases at 2 percent next year and zero the second year. Kasich’s budget would set up a $120 million college debt relief fund for graduates, allow community colleges to award bachelor’s degrees in some fields and study what drives costs at colleges and universities.

The Ohio Senate killed off the debt relief funding but proposed a two-year freeze on tuition and fees for two-year and four-year public colleges and universities. The Senate budget includes a $240 million boost in state funding to offset the lost tuition.



• Spends $71.3 billion from the general revenue funds fueled by Ohio tax collections, compared to $71.5 billion spent in the House version.


• Exempts first $250,000 in small business income from the state income tax and imposes 3 percent flat rate on small business income above that amount.

• Eliminates means testing that would have resulted in tax increases on Social Security benefits for some recipients. Administration proposal, retained in the House, raised $220.7 million for the state’s general fund and delivered $3.8 million to local governments and libraries.

• Offsets that lost revenue by imposing a 40-cent increase on a pack of cigarettes and increasing the tax rate on other tobacco products from 17 percent to 22.5 percent, and invests $8 million over two years in tobacco cessation programs.

• Requires a commission studying Ohio’s tax policy to recommend how to transition the state’s income tax rate to a flat 3.5 or 3.75 percent by 2018.


• Reduces basic state aid to schools by about $65 million, as compared to the House-passed budget, while providing funding bonuses based on graduation and literacy performance.

• Guarantees no district will fall below its fiscal year 2015 funding level while continuing to phase down the tangible personal property supplement.

• Revises school funding formula to drive additional dollars to low-wealth, low-capacity districts while ensuring more districts are on the school funding formula.

• Requires state elementary and secondary achievement assessments to be shortened, administered once each year and given in the second half of the school year.


• Freezes tuition rates at public two-year and four-year colleges and universities for the two years beginning in July.

• Requires institutions to propose ways to also reduce student costs by 5 percent.

• Increases state higher education funding by $81.9 million a year over the biennium, plus an additional $76.2 million in fiscal year 2017.

• Prohibits a state university from requiring students to live in on-campus student housing if they reside within 25 miles of the school.

• Ensures that by Dec. 1, 2018, any associate degree may be transferred from one state institution of higher education to another and applied to an equivalent bachelor’s degree program without barriers.


• Restores funding for Medicaid coverage for pregnant women up to 200 percent of poverty and restores Medicaid coverage for breast and cervical cancer screenings.

• Rolls back a House plan to require that certain Medicaid beneficiaries contribute to a health savings account, while giving more flexibility to the administration in deciding to create such a policy.


• Provides money for bolstering police training programs and increased training hours.

• Creates a $1 million revolving loan program to help businesses affected when lakes are in economic distress, including Buckeye Lake.

• Provides $12.75 million for digital electronic pollbook technology.

• Restores an income tax credit for personal contributions to political campaigns.

• Creates an income tax refund contribution check-off to fund a program that grants wishes for children with a life-threatening medical condition.

• Creates a $1 million litigation fund for cases that involve a constitutional challenge to state statute and that name the General Assembly as a party.

• Set aside $1 million each year to put in place recommendations from a task force on police and community relations, including a database on the use of force and shootings involving police officers.

• Allows emergency responders with post-traumatic stress disorder to be eligible for workers’ compensation benefits for up to one year under one Senate change.

• Eliminates a requirement that consumers complete a form agreeing to take fireworks outside Ohio within 48 hours after buying them, though people still would be banned from setting them off in the state.

• Gives pay raises to all judges and sheriffs in Ohio.

• Eliminates special elections in February and require those asking for special elections to pre-pay 65 percent of the cost.

• Scraps a provision that would have banned the use of certain agreements with labor organizations on public improvement projects.

• Provides free public transportation to veterans who are disabled as a result of their service.


SOURCE: Ohio Legislative Service Commission